RTS 2 Non-Equities Trades: Are you ready to publish within five minutes?

In January, with a year to go, I reminded people in a blog that the timing for the publication of RTS 2 non-equities trades was reducing from 15 minutes to five minutes. The change in January 2021, comes three years after MiFID II’s inception. One of the regulation’s objectives was to push investment firms for further transparency through automation and electronification, specifically of the fixed income market where voice-trading still plays a major part.*

RTS 2, Article 7 states: “…for the first three years of application of regulation No 600/2014, within 15 minutes after the execution of the relevant transaction; thereafter, within five minutes after the execution of the relevant transaction.”

Three months to go

Now we are in October, we find ourselves only three months away from this change in regime.  Are you ready?  Does Front Office IT have this on their book of work to implement over New Year?  Have traders been made aware of the procedural changes?  If not, you are running out of time and with multiple other regulatory moving parts, as well as the B-word to contend with, my advice is make sure this gets raised as soon as possible.

My four main areas to prepare are:

  • Make sure your Front Office IT have this on their book of work and FIX messaging is tested
  • Ensure communication to Front Office happens well in advance, for any non-automated trading flows and to those teams that are monitoring real-time trade reporting and rejections
  • Work with your APAs if there is any uncertainty. Make sure you understand rules or logic that you have in place and keep up-to-date with the latest version of their FIX specification
  • Validate that Senior Manager Functions for SMCR are aware and happy with the changes to reporting and they have been proceduralised.

9% of trade reports currently don’t meet the deadline

Through Kaizen’s Accuracy Testing we have found that nine per cent of tested RTS 2 non-equities trade reports are not meeting their 15 minute real-time obligation after execution. If you’re not able to meet the 15 minute deadline, how will your internal processes meet the five minute requirement of MiFID II RTS 2, come January next year?

This is where we can help.  Our Accuracy Testing Service for MiFID II Post Trade Transparency Reporting (PTT) for RTS 1 & 2 helps firms identify and understand errors in their reported data to ensure that you are able to meet your regulatory reporting obligations.  Please contact us for a conversation with Chris or one of our regulatory specialists.

*RTS 1 Equities remains unchanged at 1 minute.